Good afternoon, ladies and gentlemen, welcome to the Clean Energy Fuels first quarter 2023 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 9th, 2023. I would now like to turn the conference over to Robert Vreeland, Chief Financial Officer of Clean Energy Fuels. Please go ahead. Earlier this afternoon, Clean Energy released financial results for the first quarter ending March 31st, 2023. If you did not receive the release, it is available on the investor relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risk, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as believe, intend, expect, plan, should, anticipate, and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factors section of Clean Energy's Form 10-Q filed today. These forward-looking statements speak only as of the date of this release. The company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA, and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8-K today. With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair. Thank you, Bob. Good afternoon, everyone, thank you for joining us. Well, for the first quarter, the good news is that our underlying growth and fundamentals were strong. Bad news is our first quarter results were impacted by an anomaly and hopefully a one-time occurrence, which was a historic spike in natural gas prices in California, resulting in a $10 million compression in our profits. A confluence of events, including unusually cold weather in California, the lack of natural gas storage capacity by the gas utilities, and the El Paso pipeline that supplies 20% of the natural gas to California being out of commission, all contributed to cause the price of natural gas to spike as high as $50 an MMBtu here in California in January. The move from $7 an MMBtu in November to January was a 600% increase, translating into an increase in our cost at the pump from approximately $1 a diesel equivalent to $7.50. We did everything we could to mitigate this unprecedented chain of events that impacted the cost of our commodity. California continues to be our biggest market by far, with the largest transit agencies in the state, dozens of refuse truck fleets, airport vehicles, and a growing number of heavy-duty trucks all fueling at our network of 150 stations across the state. We passed along some of the increase in fuel costs to these customers, but we felt we could only do so much. Good news is that they understood, in large part because every household and business in California was also seeing their gas bills at least triple, if not quadruple, during January. The other important point of this historic increase is that the price began to moderate in February, although there were still some balancing effects that we were feeling. The El Paso pipeline is back online, and gas utilities have filed plans for additional storage, and as of March, the price of natural gas at the SoCal Cityg ate was back closer to $7 an MMBtu. Something else that has been impacting our bottom line and that we discussed on last quarter's call is the price of the environmental credits. I know these are followed closely by many on this call, and as you know, there has been a nice turnaround in the California Low Carbon Fuel Credit price recently, about a 35% increase. For the majority of Q1, prices were on the low end and had an impact on our adjusted EBITDA when compared to a year ago. By March, credit prices were in line with our plan, if not exceeding it. In the first quarter, we sold over 53 million gallons of renewable natural gas, which was 34% more than we sold in the same quarter of last year. We won several large transit contracts, converted existing customers from traditional CNG to more profitable RNG, and opened additional RNG stations where Amazon heavy-duty trucks are the anchor customer. Our revenue for the quarter was $132 million, $48 million more than Q1 2022. This was heavily impacted on the plus side by the commodity price in California that I just spoke about. By the time we got to March, we saw our overall business begin to right itself and track the plan that we had at the beginning of the year. Our balance sheet remains in very good shape with $220 million in cash and investments, in addition to $132 million cash off balance sheet at our RNG supply joint ventures. As I spoke about last quarter, our first RNG supply project, Del Rio Dairy in Texas, is now online. We now have three dairies in commissioning and two others in final construction. By summertime, we should have six projects producing RNG. Many of you have read about the tragic fire at South Fork Dairy in Texas, where we had plans to build an RNG digester. While we have funded some design, engineering, and early equipment purchases for that project, we had not started on-site construction. We are now working with the dairy owner as he plans to rebuild the barn and repopulate the herd. We will keep you updated on its progress. We've added expertise in construction, project management, and origination to our RNG team that are keeping our projects moving along at a good pace. Not only Clean Energy and our customers have remained bullish on this ultra-clean fuel, but Washington knows the benefits of RNG as well. I hope you saw the announcement that a bill was introduced last month in the U.S. House of Representatives to provide a $1 per gallon tax credit for vehicles that use RNG. It's interesting to note that the bipartisan bill is being co-sponsored by a Republican member from a rural district, Congressman Brian Fitzpatrick, and a Democrat from an urban Southern California district, Congresswoman Linda Sánchez. These members understand both the environmental benefits of RNG, which reduces air pollution and carbon emissions, and that the investment of tens of millions of dollars per new RNG digester benefits their agricultural communities. We believe a companion bill will soon be introduced in the Senate by another bipartisan coalition. You know, 70% of all on-road fuel used in natural gas vehicles in 2022 in the U.S. was RNG, which is a great testament to its acceptance and the ease to transition it to existing fueling infrastructure and fleets. I think a tax credit would be a big boost to the adoption of RNG if it passes. We're also very excited about the rollout of the new Cummins 15-liter natural gas engine. It seems like a week doesn't go by that we don't hear some good, some of the country's largest fleets, like Walmart, Werner, Knight-Swift, taking delivery of these pre-production 15-liter engines. I've spoken multiple times on these calls about the importance of this 15-liter engine to the heavy-duty truck market because it delivers the power, torque, and economics the industry needs. It's incredibly gratifying to see the early response. A few weeks ago, I was with the CEO of the largest trucking company in Canada and a customer of ours, Murray Mullen, and he is anxiously awaiting the delivery of two test 15-liter engines in a few months. I've gone on a little long, and my goal is to keep my remarks shorter, giving us more time to get to your questions. I do wanna end by highlighting why I was in Canada, which was for a significant announcement with the largest natural gas company in Canada and one of the most successful energy companies in North America over the last couple of decades, Tourmaline. Mike Rose, Tourmaline's Founder and CEO, and I announced that the two companies are partnering to build a network of natural gas stations across western Canada, primarily targeting the heavy duty truck market. We've identified locations for the first four, with one already operating in Edmonton, and have plans to eventually add 15 or so stations that will be co-owned by the two companies. Clean Energy will build and operate the stations. We are very bullish about this new partnership with Tourmaline, as well as our overall business. As I detailed at the top of my remarks, we experienced some headwinds at the beginning of the year, but the momentum has already shifted back. RNG continues to be a breakthrough fueling solution, allowing fleets to decarbonize quickly and affordably. No other company is better positioned for the RNG future with our expanding low carbon supply and our growing fueling infrastructure. Thank you for your time today, and now I'll hand the call over to Bob. Thank you, Andrew. Good afternoon to everyone. Let me start with giving a little color, a little more color, around the $10 million drag on earnings in the first quarter from the high California natural gas prices. The quick math on that is that we have about 2 million gallons per month with exposure to natural gas price movement in the California market. We saw an incremental price increase of around $6.50 a gallon. That's an increase in our cost. We were able to increase our retail prices by $2 a gallon, taking our price at the pump to $7.99 a gallon versus diesel at the time was $5.99. That left us about $4.50 a gallon that we absorbed. Plus we experienced some elevated gas utilities at our California LNG plant for about another $1 million impact. Disappointing when we really were having a nice quarter. That is past, and frankly, without that anomaly, the quarter was really more in line with what we were expecting. Recent trends in the natural gas prices relative to oil remains healthy, meaning we have strong economics at our retail pricing. LCFS credit pricing has increased into the mid-80s from the low 60s, which is where it was at on our last call. Even more recently, there's been a nice rise in RIN pricing. The current economic landscape is good for us, and we think that we can recover much of the $10 million anomaly by the end of this year. Moving on and looking at volumes. We saw increases in volume across all of our core sectors, with the largest gains coming from transit and trucking when compared to a year ago. The transit sector has seen more recovery this year, and we've also had some nice customer gains. Our volumes with Amazon continued to increase, which is helping to drive the trucking sector growth. Both of these sectors, the transit and trucking, contributed to the growth in fuel gallons, which was up 18% year-over-year. Transit also contributed to service gallon growth, which was 7% compared to the first quarter of 2022. We reported a GAAP operating loss of $35.4 million for the first quarter of 2023 on revenues of $132 million, compared to a GAAP operating loss of $20 million on $83 million in revenue a year-ago first quarter. On the downside for the first quarter results of 2023 compared to the same period in 2022, we have the $10 million drag from the California gas spike in 2023. Our increased volume with Amazon resulted in incremental Amazon warrant charges of $10 million in 2023, and our RIN and LCFS revenues combined were down $4.5 million from a year ago due to the lower credit prices. On the upside, in 2023, we have $4.3 million of incremental alternative fuel tax credit revenue compared to a year ago, as the alternative fuel tax credit was not in effect in the first quarter of 2022. Our adjusted EBITDA was - $4 million for the first quarter of 2023, which includes the $10 million negative impact from the California gas prices. We've also, in our table in our press release, we've disclosed the EBITDA components of our RNG supply JVs since we are operating one project and we'll be operating more this year. Having said that, our adjusted EBITDA of the - $4 million breaks down as a - $2.9 million coming from the distribution business and - $1.1 million coming from our RNG supply business. You can calculate these figures utilizing the press release and our Form 10-Q, but we intend to update our company presentation on this adjusted EBITDA to show you the two different contributors to the adjusted EBITDA. We're gonna update our company presentation that we'll put onto our website soon. With that, Operator, please open the call to questions. Thank you. Ladies and gentlemen, we will now conduct the question and answer session. Should you have a question, please press star followed by the one on your touch- tone phone. You will hear a three-tone prompt acknowledging your request. If you would like to withdraw your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Eric Stine with Craig-Hallum. Please go ahead. Hey, Andrew. Hi, Bob. Hey, Eric. Hey, Eric. Hey. Thanks for the details on the RNG pipeline. Maybe, if you could go beyond that a little bit. I know in the past you've talked about, you know, kind of the next level, which is the number of plants that you've got in engineering phase. You know, I'd also love to hear just kind of the size of the pipeline as it stands now, you know, maybe versus six months ago, 12 months ago. Right. Right. You know, we slice, Eric Stine, thanks. We slice these things differently. You know, when you sorta boil it all down, we have nine under construction. One of those is South Fork, and I can go in a little more detail on that in a minute. You have nine under construction. You have four under engineering. You know, engineering in these projects is pretty detailed, right? It's, you're spending some money at that point, and you're getting up to about 30% drawing. They're well underway, and you have MOUs and everything. We have two kind of on the early stages of development, so they're about to enter engineering. Those are the projects, let's just call them active, where you're really moving forward. The pipeline can kind of ebbs and flows, Eric. There are 18-20 active in the pipeline where, you know, we're dealing with the farmers and passing paper back and forth. You know, now, you know, just to be clear, that number could probably even swell. I mean, you know, our guys are in touch with more than that, but that's the number that I asked for this morning as we're kind of looking at, you know, those that we really are starting to get a real nice line of sight on. There are more, you know, time will tell over here over the next few months of kind of which ones then move into the, you know, real active pursuit. The pipeline's robust. Our guys have really done a nice job on not only on the pipe and for development, but also on the RNG supply side, which, you know, is very active for us as well. Got it. Just curious, well, I guess, first of all, I mean, I think in the past, you talked about an ultimate goal. I mean, obviously, you could expand beyond this, with BP and TotalEnergies at some point, but I think targeting, like, 105 million gallons. Yeah. Is that still a number we should think about? Yes. Yeah. I'm glad you bring that up because it's still, you know. 'Cause we've kind of talked about it. We did acknowledge on the last call, you know, that some of these projects were taking a little bit longer, there's a little slippage, if you will, to the right. The main goal is still in place. That what we laid out about a little over a year ago of the 100 million gallons of our own equity account with our partners on the supply side, we're still on track for that. You know, we've always been very clear that some of that'll be greenfield, that we'll develop. Some of it could be an M&A. We'll still work on that, but we still like that number. Frankly, I'd like to see that go up. Our partners are still hooked with us on that and then at the same time, and that's, you know, in development to 2026. You know, we have to then bring a lot more third- party, you know, low CI gas and landfill gas to the equation as well. We're very busy on that front, but we really haven't changed the size of what we're trying to achieve or the money that we're gonna need to spend with our partners on it. Yep. Okay. Thanks for that. Then I guess maybe last one for me, just. I think last quarter with the Amazon stations, you had, you know, not through anything that you were doing, it was more permitting delays, you know, those sorts of things. Curious where that stands, you know, has that loosened up a little bit and, you know, when you might get back to what you would view more of a normal rollout, if you're not already there. It has. We've worked really hard. We have a very large team on the site acquisition, entitlement, permitting, side of the equation, of course, construction, right? We've worked hand in glove with our friends at Amazon as well, our construction party and all of that team starting late last year to see what we could do to streamline the process, you know, working together, utilizing all the levers that we have. I'm happy to note that we have seven stations that are, you know, under construction right now that'll come on in the next five months. Now I reviewed that with Amazon the other day. The entire, maybe less one of the original stations that we signed on to Amazon, that we've disclosed should be completed by the end of the year. You know, there's a lot more to be done there. It has sped up some. You know, we get a little break with the weather, right? I mean, we've made tremendous progress in a couple of the stations out here in California here in the last six weeks after the rain stopped, and that's also the case in other parts of the country. I'm feeling good. You know, we have cameras on all those locations, and we have meeting, a standing meeting with a big team every Friday morning at 8:30 A.M., a lot of activity as we're bringing those projects along. I'm feeling much better about that. Y ou know, those are like magic, Eric. You, you open one of those stations and, literally within, you know, a few days, even before we were in final commissioning and ready to get the, occupancy permit from a city, there was 158 trucks sitting there. It's a, it's a beautiful thing when you see it. So we're very excited about it. All right. Thanks, Andrew. Okay, thank you. Your next question comes from Rob Brown with Lake Street Capital Markets. Please go ahead. Good afternoon. Hey, Rob. Hey, Rob. Just following on with Amazon, how many stations are now open, and do you have a sense of how much the truckload you're feeling at the moment? Well, you know, now you remember, I always give this little warning that I get in trouble. But I do know this, that we, you know, there's a couple pieces to that, right? We, early on, going back, I guess, what, 18 months ago, you know, we, as they began to take trucks, we opened up our nationwide network of stations. As of last week, in my meeting with executives at Amazon, I reported that we've actually fueled heavy duty trucks, Amazon trucks and mediums at 101 of our different stations. That's a daily occurrence. As of, you know, last week, it appears to us, 'cause it changes from time to time, you know, you're approaching 1,500 trucks that are fueling on a daily basis. Okay, great. As those stations that I just discussed with Eric come online, you'll see that number, I hope, go up, you know. I know that through the public information that Amazon's disclosed, I think they've admitted to 2,000 or 2,500 trucks that they've disclosed. Our numbers should continue to go up as these stations come online. Okay, thank you. You bet. On the 15-liter rollout, that they're testing right now, how does that ramp rollout? How do you sort of see that flowing into the fleet over the next two or three years? You know, it was really pleasing to see. You know, I would like to say that Cummins has really gotten into this in a big way. You may see it, Rob, but gosh, in the last six weeks, almost every week there's another announcement coming out about different parts of the business. You know, last week at the ACT Expo in Anaheim on huge presence by Cummins, one of my salesmen reported that he thought there was as many as 20 Cummins individuals there. Now, they had a couple of the other fuels, but about fully half of that divot was natural gas portion of it. A lot of customer interest there. In fact, Rob, one of the only... The ride and drive, you know, big fuel cells and electric vehicles and all the showbiz of advanced technology innovation there, the only vehicle that made it there under its own power to be in the ride and drive, the heavy duty was the Cummins natural gas product that was driven in. It was actually being operated at the time by Walmart. Those vehicles, the way I understand it, and you may get better information from Cummins, but the way I understand it, there's about 40 of some of the nation's largest fleets that are in line now to are kind of in sequence to take delivery of those vehicles. Those are new engines that are being placed into existing diesel OEMs, right? Into trucks. They have to go to the shop from the fleet and put in the new engine. You know, those are on the road now, some of them, some of those fleets I mentioned in my remarks. I haven't seen anything official from Cummins, but, you know, the early reports are, the lady that drove the truck from Walmart had just, you know, a very good report that she imparted there to the people at ACT Expo. I have my fingers crossed that the customer experience is gonna be good. The torque and horsepower is good. I saw I think today Cummins made another announcement on their upfitting program on their new design back of cab, you know. I really like this because you're beginning to see sort of the OEM nature that Cummins can bring now with their upfitting, you know, capability to bring the fuel system and everything, you know, together as a factory product. They've improved that. They have a 170 gallon option and I think 130 gallon options. It really looks slick. It's like lighter, 400 lbs lighter. Yeah. That tank package is, thank you, Bob, 400 lbs lighter. Seems like things are going well and I'm hoping, you know, I always get out there a little bit ahead of myself. You know, the story is later this year, the kind of order book will open at some point. I'm hoping that, you know, we begin to see those orders taken for that engine. Okay, great. Thank you. I'll turn it over. Okay. Your next question comes from Manav Gupta with UBS. Please go ahead. Hey, guys. I actually quickly wanted to touch a little bit on the third-party volumes. Some of your upstream projects are delayed. Some of your competitor upstream projects are also slightly delayed. In, you know, in your guidance, you had indicated that you're still seeing very strong contractual volumes from third parties for both landfill and dairy RNG. Can you talk a little bit about your third-party volume contracts as they relate to RNG and the volumes you actually distribute through your outlets? Sure. Bob, you might have those numbers. I think- handy here. You know, the third party... I'll start, Manav. Good to hear your voice. The third party is a very important piece to our story until we begin to... Well, it always will be, right? I think what the count is, we have 63 different RNG suppliers. We, you know, we work with almost everybody in the business, landfill and dairy. Our dairy is increasing dramatically this year that we're bringing in from third party. I think it's going from, you know, roughly in California from 20 million gallons of our load of dairy RNG last year to something closer to 60 million for 2023. Big, nice increase. We have, what? About a 20% increase in third-party supply for 2023. That's, you know, right now on budget. We'll end up with about 234, I think, million gallons for the year. It's going well, Manav. Yeah. I Andrew, I agree. I think I mean, it ebbs and flows as we have always seen it, but it's not really being impacted by us seeing that projects are delayed kind of thing. Because all of our third-party supply is pretty much operating units. Anything that we come across there might be, you know, from an operational matter where yield is a little different. Because we're kind of spread out with a number of the suppliers, then all that is anticipated. You know, we're planning on our 234 million gallons from third party for this year. Yeah. I think we're on track on that. No, it's a good question. Are we seeing a slowdown? No, I think we'll be able to meet our demand with our, you know, which is in large part due to our third-party supply. Yeah, congrats on that. Quick follow-up, and then I'll turn it over. You mentioned in your opening comments you are seeing some improvement in LCFS prices. There were meetings at Health at CARB. They are looking to make some changes over there to support higher carbon prices. You guys obviously talk to them a lot more than we can, so help us understand a little better what's going on with CARB, and are they actually serious about making some changes which will help support higher carbon prices in the future? I'll turn it over after that. Thank you. Okay. Well, I would say first off there, you know, we're in weekly, if daily contact with different groups at them as they look at adjustments to the Low Carbon Fuel Standard Program. Which kind of the way it works, Manav, is there will be one more kind of community workshop at the end of this month, end of May, 1st of June. You should see sometime. You know, these things aren't set in stone right now, but, you know, it looks to us pretty closely that in June, July, you'll begin to then sometime in mid-June, you'll have a proposed rule out on adjustments to the Low Carbon Fuel Standard. You know, the board will then begin to hear that some 30 days or so after. Sometime in late July, August, that'll kinda move along. Of course, there'll be a lots of input on that. I wouldn't say that the ARB is looking to make adjustments to raise the price. I don't know that they would, they would agree with that. I think they're looking to make some adjustments in the program to increase the compliance curves. That is, require more obligation by the obligated, or compliance by the obligated parties to use more renewable fuel, low carbon fuels in the state. You know that we're at about 20%, there's a couple of choices that's sitting before ARB, all of which are constructive for our business, we believe. Biomethane business is 30%, increasing from 20% to 30% or 35%. An awful lot of the industry and others have weighed in that we think the time is right to move to the 35%. We believe that the industry is willing to spend the money, the private sector are willing to spend the money to be able to get to the 35% over time. That's exciting. We think that'll shake out. There are some other things that are, you know, kind of, I would consider sort of, you know, some hurdles about where the supply could come from and how long you could go into certain, you know, how long could RNG go into certain markets. We're making our views known on that. If the ARB finally, on this point, if the ARB moves to a 35% compliance, you know, level, you're gonna need all the RNG you can get from all over the United States. I hope that's where they'll land. If so, that will, I think, positively impact prices. I think frankly, you're seeing the market begin to bet a little bit that there is gonna be a higher obligation threshold, and I think that's why the prices moved from $60-$85, $62-$85. Mm-hmm. It likely could move a little bit higher. Even though it doesn't take effect for another year, right. Thank you so much, guys. Thank you. Thank you. Our next question comes from Dushyant Ailani with Jefferies. Hi, Andrew. Hi, Bob. Thank you for taking my questions. Yes. Hi. My first one is on the Tourmaline contract. Could you kind of share some, you know, some more color around the economics of it, the cadence of RNG stations, you know, coming online over the next couple of years, yeah, just maybe some more color around that? Yeah. Well, we have line of sight on four. One is actually operating. We'll get those, we should get those constructed for the most part this year, maybe going into the first quarter of 2024 on the other three. We've already identified probably 10 others- Right in that market, and those will come on. you know, like our whole model is you have to go through a period to build them. Doesn't take that long. what we're most excited about there is our partner there, Tourmaline, they're in this to drive adoption of natural gas heavy-duty trucks. They want natural gas heavy-duty trucks on the road up there in Canada. As Andrew and I have been up there, the view is very bullish on- Yeah on that type of vehicle. They do need the 15-liter, so that also plays in. The timing is- Right ...the timing is good because, you know, if we had all the stations right now, we wouldn't probably have the vehicles, so we don't. We need to hurry up and get those built, and then we're working. The thing is with Tourmaline, they have so many operations. They see all of the various geographic areas where there's thousands of trucks going by. Right locations each day. We'll get about four in this year, early part of next year, and just keep on going from there. You know, the nice thing in Canada is you have a huge, vast resource of natural gas, and you have very expensive diesel. You really have economics. This thing sits on its own bottom up there. Over time, you will, you know, parse in some RNG. Everybody's open to that. As you know, may know, there is a federal RNG low carbon fuel program in Canada. It kind of kicks in, you know, phases in over time. I think it's already in BC. You know, everybody understands that you'll begin to blend in RNG later, but it'll start out, compressed natural gas and the economics of it look good as compared to diesel. Understood. Just a quick follow-up on that. In terms of permitting, how's that, you know, coming along? Are there any issues around that? Like, is it relatively easier to get it versus what you've seen, you know, versus Amazon? Yes. No, I wouldn't say easy, but we on the first four, we're pretty well into those. Yeah. No, you always have it, but I do believe that, you know, the areas are kind of heavy industrial. I don't know that the permitting is gonna be, you know, as prevalent as it is when we wanna put something, you know, into San Bernardino. Understood. Understood. My final question, and then I'll turn it over, is just on Del Rio in terms of pathway approvals. How's that coming along? Then any kind of thoughts on the other, you know, facilities that are gonna come on this summer? I think you talked about six, you know, flowing by summer. Just if you could share some color on the pathways approval for these. Well, you know, pathways take longer. You will begin to operate these. You know, these things come on production, and then you'll put into storage, right? The pathways take, can take... We gotta work on this. The industry, everybody's aware of it. The pathways, in my humble opinion, take way too long right now, right? Pathways can be anywhere from 12 months to longer. You don't have to wait for the pathway, but you can't operate to your full potential, and you have to store some gas. That's. then- That pathway, you know, is underway, but that takes a while. Yeah, 'cause you have to, you have to run the dairy. Yeah. You have to get, you know, a number of months of operation. Yeah Data that they collect, and then establish the CI scores. All that is, you know, in the works, if you will. Yes. That'll take some time. Understood. Thank you. I'll turn it over. Okay. Thank you. Your next question comes from Matthew Blair with TPH. Please go ahead. Hey. Good afternoon, Andrew and Bob. Could you talk about how the economics for dairy RNG will change in 2025 when the benefits of the IRA flow through? Should we expect that you would receive a PTC of approximately $80 per MMBtu in addition to the existing support from D3 RINs and LCFS programs? We'll get PTC at whatever, you know. We hope it's $80. It is. It, it would be an addition. Matt, I mean, to your point, it's kind of on top of, you know, on top of the economics that we'd built in to justify the investment. You know, it's additive, for sure. You know, the big question is on, how much. We continue to hear that it could be substantial. Yeah. You know, Matthew. And then- It's graded on the carbon intensity of the fuel, and that rule has to be, you know, promulgated by the treasury secretary. That hasn't happened yet. We don't wanna count our chickens, you know, before they hatch, but we think it could be substantial, as Bob said. Yeah. It's relevant in the marketplace, you know. It's in the narrative for sure. Sounds good. Could you talk about what gives you confidence to keep the full year guide of $50 million-$60 million EBITDA? Are there any parts that are coming in better than expected that would offset the $10 million loss from high California natural gas prices in Q1? Yeah. I mean, the I mean, we've since. Now some of this has to save it. Look, you know, when we set our plan and talked about our guidance, we said we're kinda going low on LCFS in the low 60s. That's at, you know, right now 85. You know, if there's more encouraging news, that could go even more. I think the LCFS is cooperating nicely. The RIN is cooperating nicely. Just in general, kind of the underlying commodity economics at our stations before the credits, you know, we're at, like, a 30+ spread between WTI crude and NYMEX. Yeah. Okay? You're at, you know, 70 something and $2.26. When we see that just means that we're very competitive. We have a low cost delivered product that's against a relatively high priced competitor in diesel. That's good for us. I like all that. Moving forward, we know we have enough of the year, you have about nine months, you know, we feel like you could raise kind of our $10 million hickey, if you will, and stay with it. Sounds good. Last question. I think you have stations in Seattle and Tacoma, Washington State unveiled their LCFS program. Could you talk about how that's going and whether you're starting to receive like any sort of LCFS contribution from Washington so far? You know, we do. We, we participate in the program in Oregon and Washington. I don't believe we've collected anything yet in British Columbia. I can't give you any more specifics than that. It's not material. It's not material yet. Not material. We'll try to get back to you on that, but I just don't know. It's not a lot. You know, we have a few stations up there. Yeah. It is. Well, it'll grow. It'll be meaningful. you know, it doesn't really make the radar at the moment, but, we see volume up there. We'll get it. Oregon, a little less, but. Higher, higher pricing. They have great prices. I mean, it's more about the, you know, the truck traffic and that sort of thing. Right. It's not anything that, you know, anything that we're doing to not be there, so. Sounds good. Thanks for the information. I'll try to get that. I'll try to get I'll try to get that number, Matthew. I'll try to get a number. Okay, great. Thanks. Okay. Your next question comes from Paul Cheng with Scotiabank. Please go ahead. Hey, guys. Good afternoon. Hi. Andrew and Bob, just two questions. One, in Amazon, can you talk about the path to profitability on that joint venture? I don't think they are profitable yet, and what is the economy of scale that you need in order for you to really get profitable on there? If we looking at there's a multiple avenue, I suppose, that you can get to total population profitable over the next, say, by 2025, if the plan go through. What is the most critical path or the most important driver, in your opinion, for you to get to profitability? Okay. Okay, Paul, on your first question on Amazon, let me see if I get this right, on kinda Amazon. Yeah. if you will. Mm-hmm. Okay. I don't know that we've... We haven't, I know. I won't say I don't know. I'll say we have not discussed the economics on Amazon, so I'm curious. I'd be curious as to maybe what you're looking at to say, you know, when would Amazon be profitable or not. I think that certainly one of the things we see in our numbers is the Amazon warrant charge. Right. Okay? You know, that's not an item that affects the kinda cash collected at the station in terms of, you know, when we transact on price per gallon and just what all is entailed relative to that. There is that aspect to it. The Amazon warrant charge will be here for a while as they consume the amount of spend that was targeted for them to earn the warrant. Yeah. Maybe let me rephrase it. If I exclude the warrant charges, is your joint venture with Amazon today, you don't have to tell me the exact number, but can you share whether they are profitable? Well, I'll say this. We are investing in building stations, and we have a model that would suggest that we need a fair return on investments. You know. It's fair. Look, all, You know, all that's kinda negotiated, but understood that the commitment that we have with Amazon is good for both parties. Right. Yeah. Okay? We make, we should be able to make money, and they should be able to get one of the best fuels at the lowest cost around with the RNG and all of that. The more they, you know, the more they spend, is based on volume. That, you know, that benefits us. That whole program is good, and I'll say that it's beneficial. Yeah. I would just add, I mean, you know, Paul, you know, it's not spec, right? We're not spec-ing stations hoping that an Amazon truck's gonna show up, right? You know, we are working hand in glove with Amazon, and we have a relationship to volume commitments for developing these stations, and that's beneficial for both companies. Okay. Then on your other question in terms of overall corporate, you know, profitability, what, you know, what's needed there, you know, to really kinda get over the line of, you know, let's call it, you know, positive net income, if you will. You know, ultimately, it's about volume and the adoption of heavy-duty fleets of natural gas vehicles, you know? I mean, that drives. Yeah. That drives everything, all it really does. I mean, you know, all the projects of RNG supply. Look, we you know, so we're but we're bullish on that because, well, I mean, because it's kinda the epitome of renewable energy that's running our transportation fleet. You know, of course, we're. The and part of that, the big part of that, Paul, is because for a while, we're already kinda built out to take on much more volume. That would really kinda pop with us, because we could already take on a lot of capacity without really expending much more, you know, significant CapEx. That's really the. That's the play on it. You know, the big market that is just untapped literally is the Class 8 heavy-duty truck market that's 40 billion + gallons a year that predominantly uses the 15-liter engine. Bob or Andrew, do you think that path to profitability, the critical mass is like what? 80 or 100 million gallon sales? Or what is that number in your opinion when you're looking at your internal model? Well, good question. There's a lot, there's a little bit, but a lot under that. I mean, 'cause as we go through, as we just talked about, with our, you know, Amazon warrant charge and that sort of thing. It won't. I'll just say this, it's not a tremendous lift because you can start to do the math and say, if you added 100 million more gallons at $0.45-$0.50 a gallon on a margin, without expending a whole lot of other OpEx, you're putting in, you're dropping in another $50 million that, you know, puts us on the positive side. Mm-hmm. Kinda thing. All right. Will do. Yeah. Thank you. Your next question comes from Craig Shere with Tuohy Brothers. Please go ahead. Good afternoon. Thanks for fitting me in. Wanted to just dig a little bit into the EBITDA ramp. First, for this year, in terms of making up for the $10 million drag in mostly January, it sounds like pricing power on low gas prices that all things remaining equal, you know, from here forward with, you know, LCFS and RINs, you know, who knows? That's just kind of a static situation where you have an opportunity. If everything remained the same as it is today, should we assume that making up that $10 million would be kind of ratably equal over the next three quarters if it happened versus rising over time? How do you see that progression? Yeah. It rises. I mean, the, you know. Right. You know, I said it'd be, you know, our progression would be somewhat similar to last year, which was it rises. The reason it rises is because of volume. It's not rising because we're, you know, saying that first as it, you know, that LCFS is gonna go $85, $90, $110. We're not kinda playing that math. Volume ramp. It's mainly- Oh. It's Amazon station volume ramp, other stations that come on. Yeah. It's volume ramp, and it's always. I know it frustrates some of you that want, you know, we should maybe. We're working on, you know, maybe a little more clarity quarter-over-quarter. You know, we've always had, those of you that followed us a while, we've always had a ramp that starts a little bit low in the first quarter and then ramps as they take trash trucks and we finish stations. It's always the case, it'll be the case again this year. I hear you. I'm sorry, maybe I didn't ask clearly. The ramp in terms of volumes was always a part of the plan. Yeah. The January dislocation was not, and the very wide spread that you're enjoying between gas and diesel today is not. To the degree upside versus plan for the remainder of the year can make up for January, I guess what I'm trying to ask is assuming, you know, I have no idea what the future is, but assuming all things remain equal, is there no special reason to think that you're going to have a stronger upside versus plan in the fourth quarter than in the second? Is that a fair statement? Well, I think we already answered, and you said that wasn't the answer. It would be stronger because of the volume, but on a, you know, relative basis, you get there. I mean, you're gonna see the ramp, and you're gonna see kind of. Well, we didn't see really any benefit, much of a benefit other than in kind of in March in Q1, but certainly not at these kind of current prices. All I can say is that, you know, you have the same ramp, but you have better economics. Right Than what we planned. Look, right? I mean, so. Therefore, as the volume goes up, that is impactful. Well, Yeah, it does. As you get more volume at better economics. The volumes, to your point, you know, that's in the plan, that's fine. What's not in the plan is kind of the LCFS and the RIN and as well as the spread that we're seeing on oil to nat gas. I mean, those have profound effects. If you just say, "Look, all else equal and lay in this new pricing," that's how you get there. Fair, fair enough. You don't have to go through any other big hoops. Let me now pivot to the upstream. You announced kind of a breakout, which was nice, of the two business lines in terms of the adjusted EBITDA. Assume that the RNG supply is merely an issue of fixed overhead on a burgeoning business that obviously is moving towards breakeven and positive EBITDA. But you've got these delays that you alluded to on these pathway issues. Could we reasonably expect your upstream business to be breakeven to positive by the first half of 2024? Sure. Yeah. Yeah. I mean, yeah. Yeah, there's ways that you get there, which is by producing the gas, there's economics on the gas, what gets you to breakeven. Yep. Yes. Great. Thank you. Our next question- By the way, Well, operator, if I can just... Matthew Blair may be gone, but the answer was in Washington and in Q1, we did 2 million gallons, and 50% of it was RNG. Thank you. Your next question comes from Chris [Souther] with Webber Research. Please go ahead. Hey. Good afternoon, Andrew and Bob. Hopping on for Greg. Thanks for taking my question. Hi, Chris. Sorry, you know, I just wanted to just dig in on the previous question, even on perhaps, you know, asking it in a slightly different way. Like, how did Q1 and Q2 so far compare to your internal expectations for the last quarter? Like, you know, with negative margins, right, with the historic ramp in natural gas prices, like, higher volumes kind of hurt your full-year EBITDA guidance. I'm just wondering, like, was most of it, most of the $10 million hit, was it just on pricing or a mix of, you know, higher than expected volume for the quarter? How does that fit in for the rest of your full-year guidance, considering that you guys are keeping it unchanged? Yeah. The $10 million was really on the cost of gas. Okay. Okay? You take that out, and then our quarter was within our plan. You know, all things considered. There's volume and other margins and, you know, just all throughout. We met our expectation other than. $50-dollar gas. -other than the, yeah, $54, California gas, so. Okay. Great. Right. We feel, you know, we feel like, okay, well, that was there, but you have a $10 million hole that you've dug. What does the environment look like today? Look, if nothing had changed, I'd probably have to say I would say there's be hard-pressed to say you're gonna make up a $10 million hole. Things have gotten, you know, more positive than what we kinda laid out a couple months ago in terms of what our assumptions were. That's good for us. I mean, the environment's. That's a good environment. We're, you know, just disappointed that we had to absorb what went on, which was. I mean, it frankly, it was horrific. The checks that I was writing for gas bills was out of the... It was just unbelievable. Our customers too. We had a whole campaign to contact our customers because we have a lot of kind of pass-through gas costs as part of the arrangement. So we had customers that, you know, was gonna get a bill from us that was 7 x what they've seen in the past. You know, that has, you know, ramifications all throughout. Are they gonna be able to pay? I mean, you know, it was devastating to a lot of industry here in California. Yeah. Restaurants went out of business. I mean, Yeah ...it had a lot of impact. I mean, we've seen some of the other groups in the alternative energy, the energy transition that, you know, kind of we're fairly well, you know, kind of blown away. You know, a big part of their quarter was also this topic. I feel like we, I feel like we financially, yet again have weathered a significant storm. That was not. That's not just a little talking point and, okay, it cost us $10 million. It was. That's a lot of money, and it was huge. You know, that's after we took prices up to nearly $8 a gallon compared to diesel at $5.99. Yeah. So. Yeah, no, right. I kinda see it, you know, a silver lining, right? It's like Yeah. you know, pricing elasticity... Totally. -with, RNG. Sorry? Yeah, yeah. We. Yeah. The silver lining, you know, I mean, I speak too highly of it because we've had a fair number of events, you know, that we've had to weather in the first quarter. Right now the economics are good for us. It looks good. I mean, at the 15-liter, the excitement about that, Canada, it looks good looking forward. Great. I'm going to try to squeeze one more question in. I know we've asked about this in the past, and it's always good to kind of check in. Is there any updates on the rail or marine markets with respect to commercialization or, you know, timelines to commercialization for RNG and/or hydrogen via RNG? On the marine market? On the marine market. The only update I would say is our second ship is being cooled down. It's not our ship. The second Pasha's ship is being cooled down in Brownsville at the end of this week, and will then complete a sea trial and begin to move to the Port of Los Angeles. That's nice. Every time those ships, there'll be two in service later here in the next month or so. They use a quarter of a million gallons of LNG on a round trip. We like that. The third ship should be here late 2023. No real, Chris, now I may be behind here. No real hydrogen or RNG going into shipping yet. Not as far as we know, but we are putting LNG in a few ships, and there are some other very large shipping lines that are out talking to us and others about more ships to be brought into the port. All right. No, appreciate the color. Thank you for that, and I'll turn it over. Okay. Okay. Your next question comes from Jason Gabelman with Cowen. Please go ahead. Yeah. Hey, it's Jason Gabelman from Cowen. All my questions have actually been answered. Thanks for the time, guys. Okay. Thanks. Okay, Jason. Thank you. There are no further questions at this time. I turn the call over to Andrew Littlefair for closing remarks. Good. Operator, thank you. Thank you everyone for joining us today. We look forward to updating you on our progress next quarter. Good afternoon. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.